What definition of “micro” business are HMRC using these days? I mean, it used to be that a “small” business was one with 50 employees or fewer and a “micro” was one with fewer than 10 employees. This seems to be the definition used in this Parliamentary briefing from last year, which tells us that, of the five and a half million businesses in the UK, fully four million are micro businesses like mine, which have no employees at all

If you’re an agent or micro business, HMRC’s guide to FRS 105 will help you identify any new tax considerations https://t.co/IFi1SNGb5Y

Why, then, is the HMRC twitter feed telling those four million people that they need to check whether FRS105 applies to them? What the hell IS FRS105?

As far as I can tell from following the links, it’s a change to the generally accepted accounting practice (GAAP) used to prepare accounts. If you look here, you’ll see HMRC helpfully tell you

Because of the changes to the UK Financial Reporting Standards (FRS), over the next few years UK businesses will see changes to the accounting practice used to prepare financial statements. In particular, many UK businesses will be required to apply one of the EU-endorsed IFRS, FRS 101, FRS 102 or FRS 105.

The purpose of these 3 papers is to assist businesses that will be applying FRS 101, FRS 102 or FRS 105. In particular, it provides an overview of the key accounting changes and the key tax considerations that arise for those businesses that transition from old UK GAAP to the new standards.

Clear? Well maybe, if you’re an accountant, but to this retired tax inspector it conveys almost no meaning, and to the couple who run my local coffee shop and the woman who runs the local chiropodist? Nothing except another thing to ask their accountant about, if they remember.

Why are HMRC pointing “micro” businesses to changes in accounting standard? It has taken me the best part of an afternoon to work out that, no, I don’t need to worry about it personally. Isn’t there a principle of “think small first” that is supposed to exclude the very smallest businesses from tax changes altogether where possible? Surely this ought to apply to communications too? This is not a change that a business with no employees and uncomplicated affairs needs to be concerned with at all, in my view. A business with an accountant? Well, their accountant ought to be up to date, but saying “If you use an accountant to prepare your accounts, make sure they are up to date with the changes to accounting standards here” would be an insult to the accountancy profession and its maintenance of its own professional standards.

Has HMRC learned nothing from the VATMOSS fiasco at all, where a group of micro businesses – kitchen table businesses – were all but wiped out by changes that weren’t intended to apply to them and which weren’t mitigated because HMRC had no idea these micro – nano? – kitchen table? – businesses even existed. Wouldn’t it be nice in this instance if HMRC had written an introduction to the changes which made it clear most unagented businesses don’t need to be worried, and then tested it out on a group of genuinely micro businesses? And then stopped mithering people on its twitter feed about something they will, with luck, never need to be concerned with at all?

I’ve found it! You know, the famous Magic Money Tree that Theresa May was saying didn’t exist? Well hurrah, the Times is reporting this morning that apparently she has found it; there’s to be no more austerity because £2.2 billion from #MTD (along with £4 billion on “corporation tax relief” and £1.4 billion from “scrapping permanent non-domicile status”) will sort it. Hurrah!

Except…

…as I wrote in this article for accounting web, I’m not sure there’s really £2.2 billion down the back of small businesses’ sofas.

…and as I wrote in this blog post, I’m not at all convinced there’s a correlation between “austerity” and tax receipts in the first place.

There’s a hung parliament. Things are moving quickly: in my head, I imagine someone taking on a new job, running “legislative affairs” like Josh Lyman in the West Wing. Someone whose job it is to ring round the new MPs to see if they will stand for this policy or that, as each new idea for the Queen’s Speech has to be fought through separately.

Leaving aside my fantasies about there being someone competent and grown up behind the scenes, let’s look for a moment at what a hung parliament means for taxes?

Three things. First of all, there’s unlikely to be any huge legislative change. It’s entirely possible that the proposals to make it compulsory for businesses to keep their records on an app or computer programme and update HMRC four (five?) times a year, MTD (“Making Tax Digital”) for short, will fall. Why would anyone back MTD when it is going to be as popular as a cup of cold sick with small businesses once they learn how it will affect them? Kick it down the road and make it Someone Else’s Problem, would be my instinct.

Second, the difficulty in making legislative change is unlikely to apply to actual tax rates: there are different rules. But then why would a “continuity” government want to change the rates they themselves introduced five minutes ago? They may have to give sweeties to their supporters (abolition of APD for Northern Ireland, would be my best guess from the weekend press).

But the third thing is that administratively, things will carry on much as before. The rule for the Civil Service is to carry on doing your job until someone tells you differently. So the idiotic decision to carry on with the “building our futures” plan and move HMRC into big lumps instead of a distributed network of local offices will probably carry on. There will be a new Minister, after all. (Jane Ellison lost her seat so there will be a new Financial Secretary to the Treasury but at the time of writing I can’t see an announcement of who replaces her) so there is no-one with a vested interest in saying “no” and the inertia of “keep calm and carry on” may let this go through.

I think that’s a shame: you may not. But what IS a shame is that there will be no will to change the way policy is made. When the coalition government came in there was a will to do things differently and the political space to think them through . No-one had a vested interest in continuity but in Getting Things Done. So we had Making Tax Policy Better and the invention of the TIIN. Sigh. Ah well, business as usual, at least for a while.

Imagine you’d agreed to become a school governor. Only at a meeting the day before you joined, they decided to sell off the playing fields, appoint a new headmaster and turn the school into an academy. You’d be a bit miffed, right? Because you agreed to help with the running of a school but they made it into a completely different kind of school before you had a chance to influence its direction.

It’s an analogy. The real thing is here – the report in Civil Service World that says HMRC has signed contracts for new premises during the pre-election “purdah” period. It is no secret that I think HMRC’s “Building our Futures” plan to close down its local network and move to massive regional centres is a bad idea (see here, here and here for example).

It’s also no secret that HMRC has a truly awful record of negotiating property deals (see the Mapeley deal, where it sold and leased back its own buildings via an offshore entity) and it has been reported, for “Building our Futures” that HMRC has signed inflation linked 25 year contracts with no break. Seriously? 25 years ago I was working in HMRC and we were worrying about whether we had the right number of smoking rooms and filing space, and were there enough plugs for the new computers – who knows what accommodation will be appropriate for whatever the revenue authority looks like in 2042!

HMRC get a bad idea and run with it – nothing particularly new there (VATMOSS, MTD…) but this is the day before a bloody election. If there’s a new government on Friday they may well want to look again at how HMRC is organised. Having the civil service distributed in local offices amongst the people they serve is, surely, a better way of organising society than corralling them all into Fortresses Of Doom. Signing contracts in the quiet period before an election is shocking, and has the appearance of an attempt to railroad the new government into acting on a bad idea of the old. If there’s a different government on Friday I hope the first thing they do is repudiate any such contracts, discipline the people who signed them, and have a proper look at how a modern government delivers its services.

Diversity matters. It really does. Look, I know all the arguments about asking the people with expertise (the “best” people) and you only look at what they know so how does including the legendary one-legged black lesbian help take the discussion forward, so please, don’t be a bore in the comments and go over them again.

Instead, look at this: the announcement of a Treasury Committee witness session this morning where they will be looking, inter alia, at Making Tax Digital. It’s not about all the witnesses this time being male. It’s not about them all representing accountancy and taxation bodies (because, who else would you ask). But it IS about hearing the voices of small businesses. Remember a few weeks ago when they couldn’t findanyone from the construction industry who knew about MTD? The people I know who work for the construction industry advising them on tax were a bit vexed about that.

If your meeting doesn’t look like the nation but like a badly-organised golf-club AGM then maybe, just maybe, you need to up your game and talk to some of the people affected but outside of the magic circle of “stakeholders”.

After all, that’s what happened with VATMOSS, remember? No-one talked to the people affected, because no-one at HMRC and HMT realised they existed. If they’d looked at their stakeholder groups and wondered why they kept seeing the same faces, well, who knows?

What happened to the first reading, do I hear you ask? No, I didn’t know either, but the Parliament website helpfully tells me here that the first reading is literally just someone reading it out before it’s printed ready for discussion – a formal, one might even say ceremonial, stage.

There is, however, a particularly useful briefing paper, here, which explains the background to the second reading, the change of date for the Budget and the package of paperwork which supports the Bill.

Here’s the thing. A lot of legislation and regulation comes before Parliament. Not many MPs are experts in any particular subject: tax perhaps has more than many other subjects. MPs who are not experts should be able to rely on the briefing papers that come with the bill to ensure they understand it and that it is worthy of being passed into legislation.

But they have to read them.

Seriously.

As I have said before, there are twenty measures in this Finance Bill which raise no revenue, remove no admin burden and save HMRC nothing. Why, then, are they included in the Bill at all?

No-one is, to be realistic, going to object to the entire Finance Bill tomorrow. The real work comes in the committee stage, next. Let’s just hope that the MPs involved in the committee stage actually read the material that comes with the clauses. The very least we can expect from our legislature is that those twenty measures don’t pass on the nod.

(Late edit: I’m indebted to a twitter correspondent for this link, to the Order Paper for tomorrow, which shows the Bill will be subject to a “split committal” – there’s a motion to deny a second reading on the ground that it “is a wholly inadequate response to the economic challenges being faced by Scotland and the UK” and there’s also some split of the Bill which, frankly, I still don’t quite understand, between clauses “committed to a Committee of the whole House” with the rest of it… “The remainder of the Bill shall be committed to a Public Bill Committee.” No doubt all will become clear. Or at least clearer. Watch this space!)

I have seen this Independent article circulating on social media quite a few times in the last few days: Louise Haigh MP talking about the government’s “cavalier attitude” to equalities in not conducting an equalities impact assessment before announcing the closure of some 78 Jobcentres. The DWP helpfully agrees it “will be conducting a full impact assessment as part of our planning”.

Let’s unpack this a little.

First of all, what do we mean by an “impact assessment”? The kind that I know most about is the Regulatory Impact Assessment. This is an examination of the costs and benefits of bringing in a new regulation. For tax, this is now conducted as part of producing the TIIN, tax information and impact note, which contains the table of impacts produced as part of the TIA (tax impact assessment). See the instructions on how to prepare a TIIN and the TIA which forms part of it, published on this blog here and here.

However because there was a helpful modernisation back in the noughties, when the word “regulatory” was dropped so the process became known as “Impact Assessment” (IA), there is now some confusion about the different forms of assessment that are required for different types of impact.

Mostly, assessing different specific impacts is folded into the process of producing a (regulatory) impact assessment, under the “other impacts” section. This is also true for a TIIN: the list of “other” impacts contained in the latest TIA instructions includes two different tests each, unblushingly, called PIA: the Privacy Impact Assessment and the People Impact Assessment.

Equality Impact Assessment is different. There is actual statute involved, whereas the IA, RIA, TIIN etc are basically justiciable via the concept of “legitimate expectation” (there’s clear, public, commitment to undergoing the process so theoretically you could bring a judicial review to try to overturn a decision which was made without undergoing that process).

There are two big caveats, though: equality legislation requires equality to be considered (given due regard) when reaching a decision but this doesn’t require the publication of a formal equality impact assessment document. And government is allowed to consider, yes, this will screw this particular group of people over, but – balancing the conflicting priorities of government – we’ve decided the overall policy objective is more important than the impact on [X] group of people so we’re just going to do it anyway.

So, dammit, DWP can probably get away with thinking about whether unemployed people with no money and multiple issues like disabilities can make it across towns without buses or bus fares to log onto the computers they don’t have to apply for the jobs that don’t exist and deciding, well, yes, but they have *all day* to walk miles and we’ll save money. And do it any way.

What the legislation does require, however, is that they decide to screw their customers before they make the decision to close down the services they need, and not just assess how badly they’ve screwed them over after they’ve done it.